Dear shareholders,

The year’s total harvest landed was 58,214 tonnes of headed and gutted fish, shrimp and fish meal. That is approximately 1,000 tonnes less than in 2014, but it is worth noting that we had 3,300 tonnes less cod quota to fish in 2015 than in 2014 and also a lower quota of North Sea saithe. It is primarily increased catches of shrimp and redfish that have counteracted the quota reduction. An unexpected increase in the haddock quota in the summer, together with the focus on alternative fisheries in the summer months, meant that there were substantial quotas of cod and haddock left in the last quarter. Even so, based on last year’s experience, this was not more than it should have been possible to catch. The autumn fishing was uneven however, with large numbers of fish in higher water layers than are normally fishable by bottom trawling. Thanks to our skilled employees and great efforts on board all our vessels, we managed a reasonable result before the New Year rockets were fired. However, Mother Earth gave us a timely reminder. In fishing, she is the one who decides.

HAVFISK had a sales turnover of NOK 1,131 million in 2015. EBITDA was NOK 403 million, EBIT NOK 279 million and profit before tax NOK 228 million. The average daily harvest income per vessel was NOK 363,000. New records have been set in all these and many other figures. I am concerned about value creation through good, healthy operations, and it was good operations and favourable markets that shaped last year’s profits. The share market has noticed us. Our shareholders have seen an excellent development from a share price of NOK 15.00 at the start of the year to NOK 28.20 at year end. The number of shareholders increased from 1,028 in January to 2,506 at year end.

HAVFISK works in an industry with relatively large fluctuations in both basic resources and market prices. Even so, it is our aim to give our shareholders as much predictability as possible through good returns in the form of dividend payments and increase in underlying value. After the victory in the Icelandic supreme court in 2015 in the so-called Glitnir case, and the recent general improvement in profitability, it is gratifying to note that the board can recommend a doubling of last year’s dividend. We are now also making clear our dividend policy.

At the end of the year, we sold HAVFISK’s last fresh fish trawler. Stamsund has been a reliable vessel and the crew has managed to deliver the best earnings for a fresh fish trawler in the company’s history. Rigid regulations must take part of the responsibility for our choosing not to operate purely fresh fish trawlers in future. The regulations do not allow the quotas to be split up in an appropriate way. Haddock and saithe fetch very poor prices when landed fresh. It would therefore be desirable, but not permitted unfortunately, to move haddock and saithe quotas to trawlers with freezers. However, we do have good experience from combined operations, that is to say vessels that can both freeze and deliver fresh fish (on ice) on the same voyage. This is the concept that will replace the fresh fish concept on Stamsund. After a thorough process we have therefore decided to contract a new vessel from Vard, to be delivered at the beginning of 2018. The vessel is designed for the most economical movement between fishing fields and places of delivery. It will have two load-carrying decks, one of them especially suitable for fresh fish, ice classification and triple trawl technology to obtain maximum value from shrimp fishing. Its size will also permit keeping the vessel at sea for a complete rotation without interim unloading. Naturally, 100 per cent of the raw material will also be made use of. The new build will help to move HAVFISK one step further in its continuous improvement of the operation. At the same time, renewal must occur in controlled forms and at a tempo that does not affect the company’s liquidity and dividend capacity. We will make use of the vessel lease scheme for new builds. This is a favourable scheme that gives us the opportunity to fish the replacement vessel’s quotas with other company vessels during the build period. In reality, this is a kind of structuring effect without structuring away vessels and rights permanently.

After a strong rise in the price of cod, haddock and saithe since year end 2012, in 2015 we experienced more variation in prices and the market. Cod prices increased by 39 per cent over 2014. On the other hand, the price of haddock fell dramatically after reaching a peak in the third quarter of 2014, and at the end of 2015 was about 40 per cent lower than at the same time the year before. Prices for haddock were 28 per cent lower than in 2014, as an annual average. The cause of the fall in price is complex: market conditions, trading policy conditions and an unexpected increase in haddock quotas halfway through the year all played a part. Average prices for saithe have been 16 per cent higher than in 2014, while the price of redfish has been unchanged on average, but falling during the course of the year. The most positive thing in terms of price and the market is the strong interest in shrimp for peeling, so-called industry shrimp. The price of shrimp was 56 per cent higher than the year before. The strong demand is due to shortage of raw materials because of quota reductions in Greenland and Canada. In spite of the general improvement in fish prices in recent years, it is important to realise that wild fish is still cheap food - much too cheap in the opinion of many. The price increases of recent years have come from very low levels.

At the end of 2014, Prof. Ragnar Tveterås delivered "NOU 2014:16 The Seafood Industry" to the Ministry of Trade, Industry and Fisheries. The Tveterås committee proposed a number of comprehensive and controversial changes in the Norwegian seafood industry. After consultation, in November 2015 the government presented Report to the Storting (white paper) 10 (2015-2016) “A competitive seafood industry”. In the white paper, the government has moderated many of the Tveterås committee’s proposals. Even so, the white paper has been met with considerable scepticism among some local politicians and in parts of the Norwegian fishing industry. The will to change is hardly outstanding. Some of the proposals could be of great significance for HAVFISK, even though the government's submission has been moderated from its starting point. This applies in particular to the proposals to review and possibly abolish the activity obligation, regionalise the supply obligation and abolish the processing obligation. HAVFISK is a large and important player in the Norwegian seafood industry, which means a great deal to people in many local communities, including many of our own employees on board and on shore. We carry this responsibility with us into the forthcoming discussions about the proposals. At the same time, there is undoubtedly a great need for reorganisation of the Norwegian fishing industry, as has occurred at sea. Reorganisation is a demanding but necessary process; unprofitable jobs are no safe harbour for any local community. These will be exciting discussions.

2015 went well but everything can be improved. In 2016 we are continuing with the work to optimise operations. At the same time, the fleet will be further developed by means of a focus on all the many details that combine to create results.

“As I usually say: it is about putting the focus where the battle is won or lost – on board each individual vessel.”